Ex-Haider Ally Confesses Kickbacks Linked to Hypo Sale

Josef Martinz, a former ally of the late Austrian politician Joerg Haider, told an Austrian court today that he and Haider agreed to divvy up kickbacks linked to the sale of Hypo Alpe-Adria-Bank International AG in 2007.

Martinz confessed he and Haider had conspired to award a 6 million-euro ($7.3 million) contract to a friendly tax consultant, ostensibly for advice on the sale of Hypo Alpe to Germany’s Bayerische Landesbank, court spokesman Christian Liebhauser-Karl said by phone from Klagenfurt, Austria. According to Martinz’s testimony, they planned to split the fee between the consultant and their political parties, and Martinz received 100,000 euros, the court spokesman said, confirming a report by the Austria Press Agency.

“After the execution of the Hypo sale, Haider and I developed the idea that some of that should go to the parties,” Martinz was quoted as saying in court by APA. Martinz said he was under pressure to repair his party’s finances at the time, and resigned from all political functions, according to an OTS statement.

Hypo Alpe, once owned by Haider’s Carinthia province, caused 3.7 billion euros of losses at BayernLB when Austria nationalized it in 2009. The lender, which expanded in the 2000s to become one of the biggest banks in the former Yugoslavia, has cost Austrian taxpayers at least 700 million euros since the nationalization. Austrian and German prosecutors have been investigating since 2009 how former managers and investors contributed to the losses.

Excessive Fee

BayernLB bought its initial 50 percent stake in Hypo Alpe for 1.63 billion euros from Carinthia, insurer Grazer Wechselseitige and a group of investors led by Tilo Berlin.

The Klagenfurt court has been investigating whether the fee paid by Carinthia’s state asset holding company to the tax consultant, Dietrich Birnbacher, was appropriate. Birnbacher already confessed earlier this month that the fee, which had initially been 12 million euros and was halved after it became public in 2008, had been excessive.

Birnbacher extended his confession today, adding that he had agreed to pass on part of the fee to Martinz and Haider, a populist and xenophobic politician who died in a 2008 car crash. Birnbacher had earlier denied allegations he had given part of the fee to political parties.

Following Birnbacher’s admission today, Martinz, who previously also had denied all charges of wrongdoing, confessed that he received 65,000 euros in cash and 35,000 euros via a fake invoice. Martinz said he had transfered the money to his party, the local branch of the pro-business People’s Party, which is also part of the national government.

Cash Handouts

Carinthia put 800 million euros of its proceeds into a special fund, which it used for projects including subsidizing 16-year-olds in taking their driver’s license, offering free day-care and financially supporting the acquisition of lakeside properties. Gasoline and the purchase of dirndls and lederhosen was also subsidized by the province.

The fund also allowed Governor Haider and his successor Gerhard Doerfler to personally hand out 100 euro bills to Carinthians to offset the impact of inflation on family budgets.

Birnbacher in his confession today also said two members of Haider’s party approached him with requests to draw on the money. That transfer wasn’t executed, he said. The politicians, deputy governor Uwe Scheuch and regional finance minister Harald Dobernig, denied receiving or claiming any funds, they said in an OTS statement today.

To contact the reporter on this story: Boris Groendahl in Vienna at bgroendahl@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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